460 U.S. 204 (1983), 81-1003, White v. Massachusetts Council of Construction Employers, Inc.

Docket Nº:No. 81-1003
Citation:460 U.S. 204, 103 S.Ct. 1042, 75 L.Ed.2d 1
Party Name:White v. Massachusetts Council of Construction Employers, Inc.
Case Date:February 28, 1983
Court:United States Supreme Court

Page 204

460 U.S. 204 (1983)

103 S.Ct. 1042, 75 L.Ed.2d 1

White

v.

Massachusetts Council of Construction Employers, Inc.

No. 81-1003

United States Supreme Court

Feb. 28, 1983

Argued November 1, 1982

CERTIORARI TO THE SUPREME JUDICIAL COURT OF MASSACHUSETTS

Syllabus

Petitioner Mayor of Boston, Mass., issued an executive order requiring all construction projects funded in whole or in part by city funds or funds that the city had authority to administer to be performed by a workforce at least half of which are bona fide residents of the city. The Massachusetts Supreme Judicial Court held the order unconstitutional under the [103 S.Ct. 1043] Commerce Clause.

Held: The Commerce Clause does not prevent the city from giving effect to the Mayor's executive order. Pp. 206-215.

(a) When a state or local government enters the market as a participant, it is not subject to the restraints of the Commerce Clause. Hughes v. Alexandria Scrap Corp., 426 U.S. 794; Reeves, Inc. v. Stake, 447 U.S. 429. In a case like the instant one, the only inquiry is whether the challenged program constituted direct state or local participation in the market. Pp. 206-208.

(b) Insofar as the city expended only its own funds in entering into construction contracts for public projects, it was a market participant, and entitled to be treated as such under the rule of Alexandria Scrap Corp. Even if implementation of the Mayor's order might have a significant impact on specialized construction firms employing out-of-state residents, this is not relevant to the inquiry of whether the city is participating in the marketplace when it provides funds for construction. Impact on out-of-state residents figures in the equation only after it is decided that the city is regulating the market, rather than participating in it, for only in the former case need it be determined whether any burden on interstate commerce is permitted by the Commerce Clause. And, even if the Mayor's order is characterized as sweeping too broadly, such characterization is relevant only if the Commerce Clause imposes restraints on the city's activity, and is no help in deciding whether those restraints apply. Pp. 209-211.

(c) Insofar as the Mayor's order was applied to projects funded in part with funds obtained from certain federal programs, the order was affirmatively sanctioned by the pertinent regulations of those programs.

Page 205

Where the restrictions imposed by the city on construction projects financed in part by federal funds are directed by Congress, then no dormant Commerce Clause issue is presented. Pp. 212-213.

384 Mass. 466, 425 N.E.2d 346, reversed and remanded.

REHNQUIST, J., delivered the opinion of the Court, in which BURGER C.J., and BRENNAN, MARSHALL, POWELL, STEVENS, and O'CONNOR, JJ., joined. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, in which WHITE, J., joined, post, p. 215.

REHNQUIST, J., lead opinion

JUSTICE REHNQUIST delivered the opinion of the Court.

In 1979, the Mayor of Boston, Mass., issued an executive order1 which required that all construction projects funded

Page 206

in whole or in part by city funds, or funds which the city had the authority to administer, should be performed by a workforce consisting of at least half bona fide residents of Boston.2 The Supreme Judicial Court of Massachusetts decided that the order was unconstitutional, observing that the Commerce Clause "presents a clear obstacle to the city's order." 384 Mass. 466, 479, 425 N.E.2d 346, 354 (1981). We granted certiorari to decide whether the Commerce Clause of the United States Constitution, Art. I, § 8, cl. 3, prevents the city from giving effect to the Mayor's order. [103 S.Ct. 1044] 455 U.S. 919 (1982). We now conclude that it does not, and reverse.

I

We were first asked in Hughes v. Alexandria Scrap Corp., 426 U.S. 794 (1976), to decide whether state and local governments are restrained by the Commerce Clause when they seek to effect commercial transactions not as "regulators," but as "market participants." In that case, the Maryland Legislature, in an attempt to encourage the recycling of abandoned automobiles, offered a bounty for every Maryland-titled automobile converted into scrap if the scrap processor supplied documentation of ownership. An amendment to the Maryland statute imposed more exacting documentation requirements on out-of-state than in-state processors, and out-of-state processors, in turn, demanded more exacting documentation from those who sold the junked automobiles for scrap. As a result, it became easier for those in possession of the automobiles to sell to in-state processors.

The practical effect was substantially the same as if Maryland had withdrawn altogether the availability of bounties on hulks delivered by unlicensed suppliers to licensed non-Maryland processors.

Id. at 803, n. 13. In upholding the Maryland

Page 207

statute in the face of a Commerce Clause challenge, we said that

[n]othing in the purposes animating the Commerce Clause prohibits a State, in the absence of congressional action, from participating in the market and exercising the right to favor its own citizens over others.

Id. at 810 (footnotes omitted). Because Maryland was participating in the market, rather than acting as a market regulator, we concluded that the Commerce Clause was not "intended to require independent justification," id. at 809, for the statutory bounty.

We faced the question again in Reeves, Inc. v. Stake, 447 U.S. 429 (1980), when confronted with a South Dakota policy to confine the sale of cement by a state-operated cement plant to residents of South Dakota. We underscored the holding of Hughes v. Alexandria Scrap Corp., saying:

The basic distinction drawn in Alexandria Scrap between States as market participants and States as market regulators makes good sense and sound law. As that case explains, the Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national marketplace. [Citation omitted.] There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market.

447 U.S. at 436-437.3

Page 208

We concluded that South Dakota, "as a seller of cement, unquestionably fits the `market participant' label," and applied the "general rule of Alexandria Scrap." Id. at 440.

Alexandria Scrap and Reeves, therefore, stand for the proposition that, when a state or local government enters the market as a participant, it is not subject to the restraints of the Commerce Clause. As we said in Reeves, in this kind of case, there is "a single inquiry: whether the challenged `program constituted direct state participation in the market.'" 447 U.S. at 436, n. 7. We reaffirm that principle now.

The Supreme Judicial Court of Massachusetts concluded that the city of Boston is not participating in the market in the sense described in Alexandria Scrap Corp. and Reeves because the order applies where the city is acting in a nonproprietary capacity, has a significant impact on interstate commerce, is more sweeping than necessary to achieve its objectives, and applies to funds the city receives from federal grants. 384 Mass. at 479-480, 425 N.E.2d at 354-355. For the same reasons the court found that the city is not a market participant, it concluded that the executive order violated the substantive restraints of the Commerce Clause.4 Ibid.

II

Petitioners and respondents both, to a greater or lesser extent, seek to have us decide questions not presented by the record in this case. In support of the Massachusetts court's finding that the city is acting in a nonproprietary capacity, respondents urge that much of the construction subject to the Mayor's order involved nonpublic projects that were financed largely through private funds. While the Mayor's order by

Page 209

its terms would appear to apply to such construction, there is simply nothing in the record before us to support the conclusion that city funds were used for these types of construction projects. Respondents, had they wished to raise this question, were obligated to offer some evidence that city funds and private funds were used jointly to finance construction of some of the projects which were in fact subjected to the provisions of the Mayor's order; nothing in the record supports such a conclusion.5 The only issues before us, then, are the propriety of applying the Mayor's executive order to projects funded wholly with city funds and projects funded in part with federal funds. We address first the application of the order to city-funded projects.

The Supreme Judicial Court of Massachusetts expressed reservations as to the application of the "market participation" principle to the city here, reasoning that

the implementation of the mayor's order will have a significant impact on those firms which engage in specialized areas of construction and employ permanent works crews composed of out-of-State residents.

384 Mass. at 479, 425 N.E.2d at 354. Even if this conclusion is factually correct,6 [103 S.Ct. 1046] it is not relevant

Page 210

to the inquiry of whether the city is participating in the marketplace when it provides city funds for building construction. If the city is a market participant, then the Commerce Clause establishes no barrier to conditions such as these which the city demands for its participation. Impact on out-of-state residents figures in the equation only after it is decided that the city is regulating the market, rather than participating in it, for only in the former case need it be determined whether any burden on interstate commerce is permitted by the Commerce Clause.

The same may be said of the Massachusetts court's finding that the executive order sweeps too broadly, creating more burden than is necessary to accomplish its stated objectives. Id. at 480...

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